The next step for Saab, after securing their next three-month extension in court tomorrow, is a process that I believe is called ‘composition’ – where Saab spell out what creditors will receive in settlement of debts currently owed.
I may not have all the facts straight here, so correct me if I’m wrong.
Whilst the vast majority of Saab’s debts are owed to GM – around 90% – there are a number of smaller creditors who could still petition for Saab to be placed into bankruptcy.
Saab’s offer to creditors is believed to be around 25 cents on the dollar, but if they are forced into bankruptcy, it’s believed that those creditors would only get around 15 cents on the dollar.
Dagens Industri have a fairly comprehensive article on the situation (thanks ctm!!) and I’ve done a Googletrans of it for reproduction here. This is unedited, but I think you’ll get the gist of it:
Saab appeal to creditors: Save us from bankruptcy
Saab Automobile now appealing to its 700 creditors that they should not bring the company into bankruptcy.
It shows the document that Saab has sent to its creditors and DI took it. At least 40 percent of creditors must be this week, send in their support for the proposal which chords Saab pay only 25 percent of their debts.
“To be able to submit the application on a CVA 40 per cent support for the proposal and to obtain the composition set required 75 percent majority of the voting creditors,” according to Saab Automobile in a document last week was sent to all creditors in which they are invited to support composition proposal and mail a proxy to the administrator Guy Lofalk.
Guy Lofalk writes in the document: “In the event of bankruptcy, the unsecured creditors will most likely not to have more than 15 percent in dividends compared to the 25 percent that Saab offers its creditors a composition.”
A total of Saab 10.5 billion in debts to its creditors which owner General Motors accounts for over 90 percent. But Saab could be put into bankruptcy by a larger number of small creditors with requirements that are not so great.
Surprisingly many of the creditors still have relatively large requirements for Saab Automobile despite owner GM’s purchasing director Bo Andersson has promised to pay all debts incurred before February 20 when the Saab applied for reorganization.
The choice of the creditors now have to do is to either support the chord and wait
to July 2010 on the composition proceeds paid or to take a chance that a bankruptcy is better and faster delivery.
“We are thinking now of which option is the best. We must also take into account the work and the revenues we may receive in the future of Saab avoid bankruptcy,” says Anders Atterling head of investor relations for listed technology consultant Semcon which, according to the creditor list annexed to document has about 10 million in demand for Saab.
The list of liabilities is a recent update of the claims was when Saab was requested in the reorganization February 20 decreased to those paid by GM.
These are the chords to the proposal. During reconstruction reported in virtually all have been paid in cash.
“Every company should vote according to their own situation and what benefits them most,” says Svenåke Bergli CEO of Automotive Components Group, which react strongly to so many suppliers have not been paid by GM.
Among those who almost been fully paid is car company Autoliv, Kongsberg Automotive and bumper manufacturer Plastal which is in bankruptcy.
International Automotive Components, IAC, with factories in Gothenburg, Färgelanda and Skara has not been fully paid but have requirements of 10 million. Marcus Nyman, CEO of IAC, Sweden was critical at the recent creditor’s meeting, which has not yet yielded results.
Customs has 5 million in demand for Saab, Fyrstad power requires 11 million, Swedish government 348 million and Ice Hotel in Jukkasjärvi 2 million.
Austrian Magna Steyr to discuss transfer of production of the 9-3 convertible to Trollhättan has 104 million in claims. GM European Treasury, the so-called cash pool in New York has 6.5 billion in receivables.
Bankruptcy lowers the value Saab presents a fresh valuation of its assets and compare with total arrears on March 31 this year.
The market value of fixed assets, which is essentially the value of machinery, plant, buildings and land for Trollhätte – the factory which is estimated to 5.8 billion kronor, but the cow – course the value of “only” 742 million.
Total reported deficit in Saab Automobile to 4.2 billion kronor, but the entire 9.9 billion in a bankruptcy.
“Sales of Saab Automobile would go to waste if the company is in bankruptcy. The same applies to the financing available through the European Investment Bank. The consequences are difficult to grasp,” writes Guy Lofalk.